Gold strongly reversed its fortunes in London Thursday, buoyed by safe-haven demand following the outcome of an EU referendum in the Netherlands and a weaker dollar.
Spot gold was up 1.3% at $1,238.20 a troy ounce in midmorning European trade, having hit a five-day high earlier in the session at $1,239.65 an ounce.
Dutch voters rejected a landmark European Union trade deal with Ukraine, hinting at unease within the bloc and sparking demand for the safe-haven asset among risk-averse investors.
“The gold price is presumably also finding support from the No vote in the Dutch EU referendum,” analysts at Commerzbank AG wrote in a note.
“Although this ’only’ concerned the EU-Ukraine Association Agreement, and although the referendum is not binding, it can be regarded as a test of sentiment [2½] months ahead of the Brexit referendum in the U.K.”
Late on Wednesday, the release of minutes from the Federal Open Market Committee’s most recent meeting confirmed a lack of consensus among members on the timing of future U.S. interest rate increases.
The Fed’s dovish position helped soften the greenback Thursday, making the dollar-priced metal cheaper to buy for those holding other currencies. The WSJ Dollar Index was recently down 0.08% at 86.41.
Looking ahead, global risks combined with the Fed’s position on rates should propel gold higher.
“We remain bullish on the yellow metal and the IMF’s meek outlook on global growth coupled with heightened uncertainties may continue to boost gold’s allure,” said Lukman Otunuga, a research analyst at FXTM brokerage.
Among the other precious metals, spot silver was up 1.1% at $15.202 an ounce, spot platinum was up 1.2% at $953.99 an ounce and spot palladium was up 0.3% at $540.20 an ounce.
This story originally appeared on OUTLET by Ese Erheriene on April 7, 2016. View article here.